FA MAG

For many clients, the primary objective in retirement saving is creating as big a nest egg as possible while they can, according to some experts. But they caution that emphasis needs to be placed on converting those assets into enough income to support a good post-work life lasting 30 years or longer.

How to achieve that, however, is a subject of much debate.

“There are multiple viable approaches to building a retirement-income plan, and it's important to take time to understand which will best meet the personal preferences of each individual retiree,” said Wade Pfau, author of the "Retirement Planning Guidebook."

Conventional wisdom says that retirees will be fine if they cash in roughly 4% of their portfolio in the first year of retirement and then withdraw the same dollar amount, adjusted for inflation, every year thereafter. But this principle, first proposed in the mid-1990s by financial advisor Bill Bengen, was based on stock and bond returns from 1926 to 1976. Some advisors say it’s too rigid and out of date. Bengen himself recently said the concept should be amended given current inflation and longevity data.

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